Federal Reserve officials are wary of launching more asset purchases, according to minutes from the central bank's latest meeting.

Concerns about corporate profits also took a toll on sentiment following weaker-than-expected second-quarter reports. Shares of Supervalu sank 48% after the grocery chain reported weak results and suspended its dividend payment as the board explores "strategic alternatives."

"The market is wary of earnings," said Clark Yingst, chief market analyst at broker-dealer Joseph Gunnar. "I think we will either get earnings that fall short of expectations or disappointing guidance."

A drop in claims for unemployment benefits, which came during the 4th of July holiday week, failed to brighten the gloomy mood.

Investors were rattled by a weak report on employment in Australia and speculation that Chinese gross domestic product, due after the market closes, will disappoint.

"The market is being pressured by lack of confidence in global growth," said Nick Kalivas, market analyst at New York-based investment management firm Hadrian Partners.

The Dow Jones industrial average (INDU) fell 31 points, or 0.2%, to end at 12,573. The S&P 500 (SPX) slid 7 points, or 0.5%, to 1,335. The Nasdaq (COMP) declined 22 points, or 0.7%, to 2,866. All three indexes were down about 1% earlier in the day.

Economy: The Labor Department reported 350,000 people filed for first-time unemployment benefits during the week ended July 7 -- beating expectations and reaching a four-year low. The latest numbers showed a decrease of 26,000 from the previous week's 376,000.

Companies: Shares of Supervalu (SVU, Fortune 500) plunged after the grocery store chain said Wednesday that quarterly sales and earnings fell. Supervalu CEO Craig Herkert said the company is working with its financial advisors on "strategic alternatives" as it struggles under a mountain of debt.

Groupon (GRPN) shares hit a fresh 52-week low as investors continue to fret about the health of the online deals site.

Shares of Merck (MRK, Fortune 500) jumped after the company's osteoporosis drug Odanacatib showed positive results in the lab. The results caused outside observers to suggest that the company stop the study early.

Shares of India-based technology company Infosys (INFY) fell sharply after it lowered its full-year profit outlook.